Can you help me with this practice, there are answers but can you solve them please.
Q1) What is the price of an annual coupon bond with a coupon rate of 10%, $1,000 face value, and 50 years to maturity, if its yield to maturity is 12%? ($833.91) Q2) Company X is expected to pay an end-of-year dividend of $10 a share. After the dividend its stock is expected to sell at $110. If the market capitalization rate is 10%, what is the current stock price? (Ans. $109.09) (3) Consider a 5% annual coupon bond with $1,000 face value and 3 years to maturity. What is the current market price, if yield to maturity is 8%? (Ans. $922.70) Q4) What is the price of an annual coupon bond with a coupon rate of 8%, $1,000 face value, and 10 years to maturity, if its yield to maturity is 9%? ($935.82) Q5) Suppose that a bond, making annual payments with 14 years to maturity and $1000 face value is selling for $950. At this price, the bond yield 7.5%. What must the coupon rate be? (Ans. 6.91%) Q6) A Project costs $5500 and will generate annual cash flows of $660 for 20 years. What is the payback period? If the interest rate is 6%, what is the project NPV? Should the project be accepted? (Ans. Payback Period: 8.3 years; NPV = $2,570; Accept) Q7) Dynasty Corp. will pay a $3 dividend in one year. If investors expect that dividend to remain constant forever, and they require a 10% return on Dynasty stock; a) What is the stock worth? (Ans. $30) b) What is the stock worth if investors expect Dynasty's dividends to grow at 3% per year? (Ans. $42.86) (8) Sombria industries recently paid a $2 dividend, and its dividends have been growing at 5% per year. If the required return of the stock is 12%; a) What should its current price be? (Ans. $30) b) What do you projects its price to be 5 years from now? (Ans. $38.29) Q9) Joogle is high tech start up that is not expected to pay a dividend for 10 years. At year 11, you expect it to start paying an $8 dividend forever. For a 12% required return; a) What should you be willing to pay for Joogle today? (Ans. $21.47) b) What will its stock price be 3 years from today? (Ans. $30.16) Q10) Suppose Sargrass is expected to pay a dividend of $3.00 per share forever into the future but has no growth opportunities whatsoever. If the required return on Sargrass's stock is 12%, what is a share worth? (Ans. $25) Q11) Carlatent Inc. offer bonds with annual coupon payments of $55 each. The bond has a face value of $550 and matures in 7 years. What must be the value of the bond if its yield to maturity is 9.4%? (Ans. $566.38) Q12) What is the value a semi-annual bond with a coupon rate of 10%, $1,000 face value, and 10 years to maturity, if its yield to maturity is 9%? ($1065.04)
